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54-480: The report "assesses the ability of countries to provide high levels of prosperity to their citizens". This in turn depends on how productively a country uses available resources . Therefore, the Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity." Since 2004, the report ranks

108-502: A positive correlation, but the extent to which health has a causal effect on economic prosperity is unclear. There is evidence that happiness is a cause of good health, both directly through influencing behavior and the immune system , and indirectly through social relationships, work, and other factors. One study which advances a holistic definition of prosperity is the Legatum Prosperity Index (an annual report by

162-552: A report to the UK Sustainable Development Commission in 2008, comprehensively expanded on the arguments and policy recommendations. Internationally organised, the Degrowth movement is taking a similar position and argue that overconsumption lies at the root of long-term environmental issues and social inequalities , advocating for the down-scaling of production and consumption . In

216-705: A report written for the United Nations Office on Drugs and Crime . A common approach was to use a digital currency exchanger service which converted dollars into a digital currency called Liberty Reserve , and could be sent and received anonymously. The receiver could convert the Liberty Reserve currency back into cash for a small fee. In May 2013, the US authorities shut down Liberty Reserve, charging its founder and various others with money laundering. Another increasingly common way of laundering money

270-441: A result of government requirements and to avoid the reputational risk involved. Issues relating to money laundering have existed as long as there have been large-scale criminal enterprises . Modern anti-money laundering laws have developed along with the modern War on Drugs . In more recent times anti-money laundering legislation is seen as an adjunct to the financial crime of terrorist financing in that both crimes usually involve

324-518: A stable macroeconomic framework (pillar 3), and good health and primary education (pillar 4). As wages rise with advancing development, countries move into the efficiency-driven stage of development, when they must begin to develop more efficient production processes and increase product quality . At this point, competitiveness becomes increasingly driven by higher education and training (pillar 5), efficient goods markets (pillar 6), efficient labor markets (pillar 7), developed financial markets (pillar 8),

378-399: Is "dirty" and needs to be "cleaned" to appear to have been derived from legal activities, so that banks and other financial institutions will deal with it without suspicion. Money can be laundered by many methods that vary in complexity and sophistication. Money laundering typically involves three steps: The first involves introducing cash into the financial system by some means ("placement");

432-416: Is a massive and growing problem. Finextra estimated that transaction laundering accounted for over $ 200 billion in the US in 2017 alone, with over $ 6 billion of these sales involving illicit goods or services, sold by nearly 335,000 unregistered merchants. Money laundering can erode democracy . Below table shows the annual reported money laundering cases per 100,000 population for individual countries for

486-547: Is completely deterministic, protocol-based and can be difficult to censor —make it possible to circumvent national laws using services like Tor to obfuscate transaction origins. Bitcoin relies completely on cryptography, not on a central entity running under a KYC framework. There are several cases in which criminals have cashed out a significant amount of Bitcoin after ransomware attacks, drug dealings, cyber fraud and gunrunning. However, many digital currency exchanges are now operating KYC programs under threat of regulation from

540-668: Is controversial. Solutions such as ZCash and Monero ― known as privacy coins ― are examples of cryptocurrencies that provide unlinkable anonymity via proofs and/or obfuscation of information ( ring signatures ). While not suitable for large-scale crimes, privacy coins like Monero are suitable for laundering money made through small-scale crimes. Apart from traditional cryptocurrencies, Non-Fungible Tokens (NFTs) are also commonly used in connection with money laundering activities. NFTs are often used to perform Wash Trading by creating several different wallets for one individual, generating several fictitious sales and consequently selling

594-733: Is due to hedonic adaptation and social comparison , and a failure to anticipate these factors, resulting in people not allocating enough energy to non-financial goals such as family life and health. The World Bank's "Voices of the Poor", based on research with over 20,000 poor people in 23 countries, identifies a range of factors which poor people identify as part of poverty. These include abuse by those in power, disempowering institutions, excluded locations, gender relationships, lack of security, limited capabilities, physical limitations, precarious livelihoods, problems in social relationships, weak community organizations and discrimination. Economic growth

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648-579: Is integrated into the financial system through additional transactions until the "dirty money" appears "clean". Money laundering can take several forms, although most methodologies can be categorized into one of a few types. These include "bank methods, smurfing [also known as structuring], currency exchanges, and double-invoicing". In theory, electronic money should provide as easy a method of transferring value without revealing identity as untracked banknotes, especially wire transfers involving anonymity-protecting numbered bank accounts. In practice, however,

702-855: Is not included in official financial reporting and could be used to evade taxes, hand in bribes and pay "under-the-table" salaries. For example, in an affidavit filed on 24 March 2014 in United States District Court, Northern California , San Francisco Division, FBI special agent Emmanuel V. Pascua alleged that several people associated with the Chee Kung Tong organization, and California State Senator Leland Yee , engaged in reverse money laundering activities. The problem of such fraudulent encashment practices ( obnalichka in Russian) has become acute in Russia and other countries of

756-740: Is often expanded by government and international regulators such as the US Office of the Comptroller of the Currency to mean "any financial transaction which generates an asset or a value as the result of an illegal act," which may involve actions such as tax evasion or false accounting . In the UK, it does not need to involve money, but any economic good . Courts involve money laundering committed by private individuals, drug dealers, businesses, corrupt officials, members of criminal organizations such as

810-463: Is often seen as essential for economic prosperity, and indeed is one of the factors that is used as a measure of prosperity. The Rocky Mountain Institute , among others, has put forth an alternative point of view, that prosperity does not require growth, claiming instead that many of the problems facing communities are actually a result of growth, and that sustainable development requires abandoning

864-442: Is the process of illegally concealing the origin of money obtained from illicit activities (often known as dirty money ) such as drug trafficking , underground sex work , terrorism , corruption , embezzlement , and Treason , and converting the funds into a seemingly legitimate source, usually through a front organization . In United States law, money laundering is the practice of engaging in financial transactions to conceal

918-460: Is to use online gaming. In a growing number of online games, such as Second Life and World of Warcraft , it is possible to convert money into virtual goods, services, or virtual cash that can later be converted back into money. To avoid the usage of decentralized digital money such as Bitcoin for the profit of crime and corruption, Australia is planning to strengthen the nation's anti-money laundering laws. The characteristics of Bitcoin—it

972-442: Is up to the individual to prove that the source of funds is legitimate to get the money back. This makes it much easier for law enforcement agencies and provides for much lower burdens of proof . However, this process has been abused by some law enforcement agencies to take and keep money without strong evidence of related criminal activity, to be used to supplement their own budgets. The 11 September attacks in 2001, which led to

1026-715: The Global Competitiveness Report ). Data from the Global Competitiveness Index relating to the strength of auditing and reporting standards, institutions and judicial independence is used in the Basel AML Index , a money laundering risk assessment tool developed by the Basel Institute on Governance . In spite of the World Economic Forum 's Global Risks Report which is increasingly identifying environmental pressures as

1080-546: The Mafia , and even states. As financial crime has become more complex and financial intelligence is more important in combating international crime and terrorism, money laundering has become a prominent political, economic, and legal debate. Money laundering is ipso facto illegal; the acts generating the money almost always are themselves criminal in some way (for if not, the money would not need to be laundered). While existing laws were used to fight money laundering during

1134-664: The Office of Foreign Assets Control to sanction it, prompting some users to sue the Treasury Department. Proponents have argued mixers allow users to protect their privacy and that the government lacks the authority to restrict access to decentralized software. In the United States, FinCEN requires mixers to register as money service businesses. In 2013, Jean-Loup Richet , a research fellow at ESSEC ISIS, surveyed new techniques that cybercriminals were using in

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1188-574: The Patriot Act in the U.S. and similar legislation worldwide, led to a new emphasis on money laundering laws to combat terrorism financing . The Group of Seven (G7) nations used the Financial Action Task Force on Money Laundering to put pressure on governments around the world to increase surveillance and monitoring of financial transactions and share this information between countries. Starting in 2002, governments around

1242-545: The United States Treasury Department : Money laundering is the process of making illegally-gained proceeds (i.e., "dirty money") appear legal (i.e., "clean"). Typically, it involves three steps: placement, layering, and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it

1296-478: The 1980s, the war on drugs led governments again to turn to money laundering rules in an attempt to track and seize the proceeds of drug crimes in order to catch the organizers and individuals running drug empires. It also had the benefit, from a law enforcement point of view, of turning rules of evidence "upside down". Law enforcers normally have to prove an individual is guilty to seize their property, but with money laundering laws , money can be confiscated and it

1350-937: The 2011–2012 report: This is the top 30 of the 2010–2011 report: This is the top 30 of the 2009–2010 report: This is the top 30 of the 2008–2009 report: You can find the computation and structure of the GCI pp. 49–50 of the Global Competitiveness Report 2013–2014, Full Data Edition. Prosperity Prosperity is the flourishing, thriving, good fortune and successful social status . Prosperity often produces profuse wealth including other factors which can be profusely wealthy in all degrees, such as happiness and health . Economic notions of prosperity often compete or interact negatively with health, happiness, or spiritual notions of prosperity. For example, longer hours of work might result in an increase in certain measures of economic prosperity, but at

1404-603: The 2021 Review on the Economics of Biodiversity commissioned by the UK Treasury, Partha Dasgupta argues prosperity has come at a "devastating" cost to biodiversity , and that sustainable economic growth will require abandoning GDP as a measure for economic progress. Many distinct notions of prosperity, such as economic prosperity, health, and happiness, are correlated or even have causal effects on each other. Economic prosperity and health are well-established to have

1458-614: The Legatum Institute, a UK-based independent educational charity founded by Legatum ), which uses data from 56 separate sources, including the World Health Organization, Global slavery Index and World Bank, to rank 169 nations in an index which goes beyond GDP as a measurement of national prosperity. In ecology , prosperity can refer to the extent to which a species flourishes under certain circumstances. Money laundering Money laundering

1512-436: The ability to harness the benefits of existing technologies (pillar 9), and its market size, both domestic and international (pillar 10). Finally, as countries move into the innovation-driven stage, they are only able to sustain higher wages and a higher standard of living if their businesses are able to compete by providing new or unique products. At this stage, companies must compete by producing new and different goods using

1566-436: The conversion or transfer of property; the concealment or disguising of the nature of the proceeds; the acquisition, possession or use of property, knowing that these are derived from criminal acts; the participating in or assisting the movement of funds to make the proceeds appear legitimate. Money obtained from certain crimes, such as extortion , insider trading , drug trafficking , human trafficking , and illegal gambling

1620-415: The dominant risks to humanity, none of the indicators used to determine this report's competitiveness ranking reflect any of the countries' environmental dimensions such as energy, water, climate risks, resource or food security, etc. The Global Competitiveness Report 2018 and 2019 used the ecological footprint as a context indicator, but the footprint was not included in the scoring algorithm that determines

1674-437: The expense of driving people away from their preferences for shorter work hours. In Buddhism , prosperity is viewed with an emphasis on collectivism and spirituality . This perspective can be at odds with capitalistic notions of prosperity, due to the latter's association with greed. Data from social surveys show that an increase in income does not result in a lasting increase in happiness; one proposed explanation to this

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1728-454: The factor-driven stage countries compete based on their factor endowments, primarily unskilled labor and natural resources. Companies compete on the basis of prices and sell basic products or commodities , with their low productivity reflected in low wages. To maintain competitiveness at this stage of development, competitiveness hinges mainly on well-functioning public and private institutions (pillar 1), appropriate infrastructure (pillar 2),

1782-485: The former Soviet Union. The Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) reported that the Russian Federation, Ukraine, Turkey, Serbia, Kyrgyzstan, Uzbekistan, Armenia and Kazakhstan have encountered a substantial shrinkage of tax base and shifting money supply balance in favor of cash. These processes have complicated the planning and management of the economy and contributed to

1836-499: The growth of the shadow economy . Many regulatory and governmental authorities issue estimates each year for the amount of money laundered, either worldwide or within their national economy. In 1996, a spokesperson for the IMF estimated that 2–5% of the worldwide global economy involved laundered money. The Financial Action Task Force on Money Laundering (FATF), an intergovernmental body set up to combat money laundering, stated, "Due to

1890-572: The idea that growth is required for prosperity. The debate over whether economic growth is necessary for, or at odds with, human prosperity, has been active at least since the publication of Our Common Future in 1987, and has been pointed to as reflecting two opposing worldviews. In 1996, the British ecological economist Tim Jackson outlined the conflicting relationship between human wellbeing and economic growth in his book Material Concerns . Prosperity without Growth then, first published as

1944-487: The identity, source, or destination of illegally gained money. In United Kingdom law, the common law definition is wider. The act is defined as "the process by which the proceeds of crime are converted into assets which appear to have a legitimate origin, so that they can be retained permanently or recycled into further criminal enterprises". In the past, the term "money laundering" was applied only to financial transactions related to organized crime . Today its definition

1998-400: The illegal nature of the transactions, precise statistics are not available and it is therefore impossible to produce a definitive estimate of the amount of money that is globally laundered every year. The FATF therefore does not publish any figures in this regard." Academic commentators have likewise been unable to estimate the volume of money with any degree of assurance. Various estimates of

2052-447: The jurisdictions they operate. Reverse money laundering is a process that disguises a legitimate source of funds that are to be used for illegal purposes. It is usually perpetrated for the purpose of financing terrorism but can be also used by criminal organizations that have invested in legal businesses and would like to withdraw legitimate funds from official circulation. Unaccounted cash received via disguising financial transactions

2106-440: The most sophisticated production processes (pillar 11) and through innovation (pillar 12). Thus, the impact of each pillar on competitiveness varies across countries, in function of their stages of economic development . Therefore, in the calculation of the GCI, pillars are given different weights depending on the per capita income of the nation. The weights used are the values that best explain growth in recent years For example,

2160-509: The nation to be competitive. In addition, what creates productivity in Sweden is necessarily different from what drives it in Ghana . Thus, the GCI separates countries into three specific stages: factor-driven, efficiency -driven, and innovation -driven, each implying a growing degree of complexity in the operation of the economy. The report has twelve pillars of competitiveness. These are: In

2214-479: The past decade to launder funds. A mixer blends the cryptocurrencies of many users together to obfuscate the origins and owners of funds, enabling a greater degree of privacy on public blockchains like Bitcoin and Ethereum . Although not explicitly illegal in many jurisdictions, the legality of mixers is controversial. The use of the mixer Tornado Cash in the laundering of funds by the Lazarus Group led

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2268-550: The period of Prohibition in the United States during the 1930s, dedicated Anti-Money Laundering legislation was only implemented in the 1980s. Organized crime received a major boost from Prohibition and a large source of new funds that were obtained from illegal sales of alcohol. The successful prosecution of Al Capone on tax evasion brought in a new emphasis by the state and law enforcement agencies to track and confiscate money, but existing laws against tax evasion could not be used once gangsters started paying their taxes. In

2322-405: The ranking. This is the full ranking of the 2019 report: This is the top 30 of the 2018 report: This is the top 30 of the 2017–2018 report: This is the top 30 of the 2016–2017 report: This is the top 30 of the 2015–2016 report: This is the top 30 of the 2014–2015 report: This is the top 30 of the 2013–2014 report: This is the top 30 of the 2012–2013 report: This is the top 30 of

2376-404: The record-keeping capabilities of Internet service providers and other network resource maintainers tend to frustrate that intention. While some cryptocurrencies under recent development have aimed to provide more possibilities of transaction anonymity for various reasons, the degree to which they succeed — and, in consequence, the degree to which they offer benefits for money laundering efforts —

2430-479: The report is the Executive Opinion Survey, which is a survey of a representative sample of business leaders in their respective countries. Respondent numbers have increased every year and is currently just over 13,500 in 142 countries (2010). The report notes that as a nation develops, wages tend to increase, and that in order to sustain this higher income, labor productivity must improve for

2484-450: The respective NFT to a third party. According to a report by Chainalysis , these types of wash trades are becoming increasingly popular among money launderers especially due to the largely anonymous nature of transactions on NFT marketplaces. Auction platforms for NFT sales may face regulatory pressure to comply with anti-money laundering legislation. Additionally, cryptocurrency mixers have been increasingly used by cybercriminals over

2538-641: The scale of global money laundering are sometimes repeated often enough to make some people regard them as factual—but no researcher has overcome the inherent difficulty of measuring an actively concealed practice. Regardless of the difficulty in measurement, the amount of money laundered each year is in the billions of US dollars and poses a significant policy concern for governments. As a result, governments and international bodies have undertaken efforts to deter, prevent, and apprehend money launderers. Financial institutions have likewise undertaken efforts to prevent and detect transactions involving dirty money, both as

2592-407: The second involves carrying out complex financial transactions to camouflage the illegal source of the cash ("layering"); and finally, acquiring wealth generated from the transactions of the illicit funds ("integration"). Some of these steps may be omitted, depending on the circumstances. For example, non-cash proceeds that are already in the financial system would not need to be placed. According to

2646-560: The sophistication and innovation factors contribute 10% to the final score in factor and efficiency-driven economies, but 30% in innovation-driven economies. Intermediate values are used for economies in transition between stages. The Global Competitiveness Index's annual reports are somewhat similar to the Ease of Doing Business Index and the Indices of Economic Freedom , which also look at factors affecting economic growth (but not as many as

2700-452: The surge in digital asset late 2010s, there's been a noticeable rise in money laundering and fraud tied to cryptocurrency. In 2021 alone, cybercriminals managed to secure US$ 14 billion in cryptocurrency through various illicit activities. Chinese organized criminal groups have become the principal money launderers for drug cartels in Mexico, Italy, and elsewhere. Money laundering is

2754-450: The transmission of funds through the financial system (although money laundering relates to where the money has come from , and terrorist financing relating to where the money is going to ). Finally, people, vessels, organisations and governments can be sanctioned due to international law-breaking, war (and of course tit-for-tat sanctions), and still want to move funds into markets where they are persona non grata . Transaction laundering

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2808-517: The world upgraded money laundering laws and surveillance and monitoring systems of financial transactions. Anti-money laundering regulations have become a much larger burden for financial institutions and enforcement has stepped up significantly. During 2011–2015 a number of major banks faced ever-increasing fines for breaches of money laundering regulations. This included HSBC , which was fined $ 1.9 billion in December 2012, and BNP Paribas , which

2862-610: The world's nations according to the Global Competitiveness Index , based on the latest theoretical and empirical research. It is made up of over 110 variables , of which two thirds come from the Executive Opinion Survey, and one third comes from publicly available sources such as the United Nations . The variables are organized into twelve pillars, with each pillar representing an area considered as an important determinant of competitiveness. One part of

2916-537: Was fined $ 8.9 billion in July 2014 by the U.S. government. Many countries introduced or strengthened border controls on the amount of cash that can be carried and introduced central transaction reporting systems where all financial institutions have to report all financial transactions electronically. For example, in 2006, Australia set up the AUSTRAC system and required the reporting of all financial transactions. With

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